Tuesday, 14 August 2012

Pointers from Graham and Dodd

Here are a few points from the 2nd edition of Graham and Dodd's book Security Analysis which are useful to remember during these uncertain times for investors: 

  • Stock-market timing cannot be done, with general success, unless the time to buy is related to an attractive price level, as measured by analytical standards
  • Traditionally the investor has been the man with patience and the courage of his convictions who would buy when the harried or disheartened speculator was selling
  • We have been led to the old principle that the investor should wait for periods of depressed business and market levels to buy representative common stocks, since he is unlikely to be able to acquire them at other times except at prices that the future may cause him to regret.
  • It is manifest, however, that future changes are largely unpredictable, and that security analysis must ordinarily proceed on the assumption that the past record affords at least a rough guide to the future. The more questionable this assumption, the less valuable is the analysis.
  • It is only where chance plays a subordinate role that the analyst can properly speak in an authoritative voice and accept responsibility for the results of his judgement.
  •  In the fields of common stock, the danger of paying the wrong price is almost as great as that of buying the wrong issue

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